Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

v3.23.2
ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2023
Credit Loss [Abstract]  
Allowance for Credit Losses ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses - Roll-forward
The following tables present ACL activity by portfolio segment for the three-month and six-month periods ended June 30, 2023 and 2022.
(dollar amounts in millions) Commercial Consumer Total
Three months ended June 30, 2023
ALLL balance, beginning of period $ 1,457  $ 685  $ 2,142 
Loan and lease charge-offs (53) (39) (92)
Recoveries of loans and leases previously charged-off 26  17  43 
Provision for loan and lease losses 53  31  84 
ALLL balance, end of period $ 1,483  $ 694  $ 2,177 
AULC balance, beginning of period $ 75  $ 82  $ 157 
Provision for unfunded lending commitments 3  5  8 
AULC balance, end of period $ 78  $ 87  $ 165 
ACL balance, end of period $ 1,561  $ 781  $ 2,342 
Six months ended June 30, 2023
ALLL balance, beginning of period $ 1,424  $ 697  $ 2,121 
Loan and lease charge-offs (105) (86) (191)
Recoveries of loans and leases previously charged-off 49  36  85 
Provision for loan and lease losses 115  47  162 
ALLL balance, end of period $ 1,483  $ 694  $ 2,177 
AULC balance, beginning of period $ 71  $ 79  $ 150 
Provision for unfunded lending commitments 7  8  15 
AULC balance, end of period $ 78  $ 87  $ 165 
ACL balance, end of period $ 1,561  $ 781  $ 2,342 
(dollar amounts in millions) Commercial Consumer Total
Three months ended June 30, 2022
ALLL balance, beginning of period $ 1,514  $ 504  $ 2,018 
Loan and lease charge-offs (12) (40) (52)
Recoveries of loans and leases previously charged-off 24  20  44 
Provision (benefit) for loan and lease losses (184) 248  64 
ALLL balance, end of period $ 1,342  $ 732  $ 2,074 
AULC balance, beginning of period $ 57  $ 34  $ 91 
Provision (benefit) for unfunded lending commitments (4) 7  3 
AULC balance, end of period $ 53  $ 41  $ 94 
ACL balance, end of period $ 1,395  $ 773  $ 2,168 
Six months ended June 30, 2022
ALLL balance, beginning of period $ 1,462  $ 568  $ 2,030 
Loan and lease charge-offs (44) (89) (133)
Recoveries of loans and leases previously charged-off 65  41  106 
Provision (benefit) for loan and lease losses (141) 212  71 
ALLL balance, end of period $ 1,342  $ 732  $ 2,074 
AULC balance, beginning of period $ 41  $ 36  $ 77 
Provision for unfunded lending commitments 12  5  17 
AULC balance, end of period $ 53  $ 41  $ 94 
ACL balance, end of period $ 1,395  $ 773  $ 2,168 
At June 30, 2023, the ACL was $2.3 billion, an increase of $71 million compared to December 31, 2022.
The commercial ACL was $1.6 billion at June 30, 2023 and $1.5 billion at December 31, 2022. The increase of $66 million since year end was driven by a combination of loan and lease growth and modest deterioration in the macro-economic forecast.
The consumer ACL was $781 million, relatively flat compared to the December 31, 2022 balance of $776 million.
The baseline economic scenario used in the June 30, 2023 ACL determination included the federal funds rate projected to peak at approximately 5.1% in the third quarter of 2023 as the Federal Reserve continues to address elevated inflation levels. As a result, inflation is forecast to drop from an estimated 8.0% in 2022 to 2.5% by 2024. However, unemployment is expected to gradually increase to a projected level of 4.2% by Q4 2024.
The economic scenarios used included elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, and the expected path of interest rate increases by the Federal Reserve. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2023 ACL included a general reserve that consists of various risk profile components to capture uncertainty not addressed within the quantitative transaction reserve.